Globalisation

Question 1

What is globalisation?

Answer 1

• The shift towards a more integrated and interdependent world economy
• A process rather than a fact, trend or structure
• Freedom is the central issue

Question 2

What are the components of globalisation?

Answer 2

• Consumption
• Markets
• Production

Question 3

What is the globalisation of markets?

Answer 3

• Merging of historically distinct and separate national markets into one huge global marketplace
• Most global of markets are not typically markets for consumer products - where national differences in tastes and preferences can still be important enough to stop integration, but rather industrial goods and materials that serve universal needs

Question 4

What is the globalisation of production?

Answer 4

The sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production

Question 5

Why do firms engage in international business?

Answer 5

• To expand sales
• To acquire resources
  
  • Lower costs, operating knowledge
• To diversify or reduce risks

Question 6

What necessitated the emergence of global institutions?

Answer 6

• To help manage, regulate and police the global marketplace

- To promote the establishment of multinational treaties to govern the global business system

Question 7

What are the growth drivers of international business?

Answer 7

• Technology
• Liberalisation of cross-border trade and resource movements
• Development of services that support international business
• Growing consumer pressures
• Increased global competition
• Changing political situations
• Expanded cross-national cooperation

Question 8

Changes in what factors describe globalisation?

Answer 8

• Trade of goods/services
• FDI
• Capital market turnover
• Repatriation
• Number of MNC’s
• Employment, sales, assets of MNC’s

Question 9

What are the pros of globalisation?

Answer 9

• Promotes global economic growth
• Creates employment
• Increases competitiveness (and innovation) between firms
• Reduces consumer prices
• Increases consumer choices
• Increased information flows and spread of ideas
• Provides less developed countries with access to foreign capital and tech
• Cultural intermingling promotes understanding
• Increase international co-operation on economic, social and environmental issues

Question 10

What are the cons of globalisation?

Answer 10

• Economics crises are transmitted
• Destroys (manufacturing) jobs in developed countries
• Exploits labour in LDC’s with weak labour/environmental laws
• Causes environemtnal destruction in LDCs with weak environmental protection laws
• Loss of national sovereignty to undemocratic international organisations
• Increases income gap between world’s rich and poor nations
• MNC’s have the ability to exploit tax havens to avoid paying domestic taxes
• MNC’s are increasingly influencing political decisions
• Accelerates the spread of communicable diseases